EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.43
THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the
21st day of December, 2006 (“Effective Date”) by and between MARTEK BIOSCIENCES
CORPORATION (“Company,” which term shall include all subsidiaries of the Company as the context may
require), a Delaware corporation, and Xxxxx Xxxxx (“Executive”).
RECITALS
WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed
in accordance with the terms of this Agreement.
WHEREAS, the Company and the Executive have previously entered into a Proprietary Information,
Inventions, and Non-Solicitation Agreement dated September 2, 1991; and
WHEREAS, both the Company and the Executive believe it to be in their mutual interest to
cancel and supersede the aforementioned Proprietary Information, Inventions, and Non-Solicitation
Agreement.
TERMS
NOW, THEREFORE, in consideration of the mutual promises and agreements set forth below, the
Company and the Executive hereby agree as follows:
1. Term of Employment. The Company agrees to employ the Executive and the Executive
agrees to accept such employment for an initial term of three (3) years (the “Initial Term”), such
Term commencing on the Effective Date and ending on the date that is the third anniversary of the
Effective Date. The term of employment shall be automatically extended for an additional
consecutive 1-year period (an “Extended Term”) on the third anniversary of the Effective Date and
on each subsequent anniversary of the Effective Date, unless and until the Company or the Executive
provides written notice to the other party in accordance with Section 13 hereof not less than 60
days before such anniversary date that such party is electing not to extend the Initial Term or the
Extended Term, as the case may be (“Non-Renewal”), in which case the term of employment hereunder
shall end as of the end of such Initial Term or Extended Term, as the case may be. The Initial
Term and any Extended Term(s) are collectively referred to herein as the “Term.” Notwithstanding
any other provision of this Agreement, the Executive’s employment, and the Term, may be terminated
at any time pursuant to Section 6 hereof. Portions of this Agreement that by their terms provide
or imply that they survive the end of the Term, including but not limited to Sections 9, 10, and
11, shall survive the end of the Term.
2. Duties and Responsibilities.
2.1. During the Term, the Executive shall be employed as the Company’s Chief Executive
Officer. The Executive shall have such duties, responsibilities, and authority as are customarily
required of employees in the Executive’s position and such other duties and responsibilities
commensurate with such position as the Company may assign to the Executive from time to time.
2.2. During the Term, the Executive shall devote his entire business time, attention and
energies to the business and interests of the Company.
2.3. The Executive agrees that he is subject to and will comply with the policies and
procedures of the Company, including but not limited to the Company’s Code of Ethics for Directors,
Officers and Employees and policies concerning confidential information, as such policies and
procedures may be modified, added to or eliminated from time to time at the sole discretion of the
Company, except to the extent any such policy or procedure conflicts with the express terms of this
Agreement, in which case the terms of this Agreement shall control.
2.4. The Executive’s principal place of employment will be Columbia, Maryland or at such other
place as may be mutually determined by the Executive and the Company; provided, however, that the
Executive will travel to such other locations as may be reasonably necessary and/or required by the
Company in its sole discretion in order to discharge his duties.
3. Outside Activities. Except with the prior written consent of the Company’s Board
of Directors, the Executive will not, while employed by the Company, undertake or engage in any
other employment, occupation or business enterprise, other than activities in which the Executive
is a passive investor. The Executive may serve on outside boards of directors for both for profit
and non-profit entities so long as (i) such service does not create a conflict of interest between
the Executive and the Company, (ii) such service will not interfere with the Executive’s duties as
set forth in this Agreement, and (iii) if the Executive was not already serving on such board on
the Effective Date, he receives advance written permission from the Company’s Board of Directors.
The Executive may engage in voluntary community activities without written permission from the
Company, so long as such service (i) does not create a conflict of interest between the Executive
and the Company, and (ii) will not interfere with the Executive’s duties as set forth in this
Agreement.
4. Compensation and Benefits.
4.1. The Executive shall be paid an annual base salary (a “Base Salary”) of Five Hundred Fifty
Thousand Dollars ($550,000), payable in accordance with the Company’s normal payroll practices and
schedule. The Executive’s Base Salary shall be reviewed annually, with the granting of any
increases subject to the sole discretion of the Company. All payments provided for in this
Agreement shall be subject to the deduction of payroll taxes and other withholdings and assessments
as required by law or agreed to by the Executive.
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4.2. The Executive is entitled to participate in the benefit programs offered by the Company
to employees holding similar positions as the Executive, provided the Executive meets the
eligibility criteria for such programs. Such benefit programs currently include: health,
disability, 401(k), life insurance and the Company’s Management Cash Bonus Incentive Program.
These benefit programs may be modified or eliminated at any time in the Company’s sole discretion.
The Executive shall be entitled to participate in the Company’s leave, holiday and vacation
programs in accordance with the terms of such programs as they may be modified from time to time.
The Executive shall be reimbursed for reasonable business expenses in accordance with the Company’s
expense reimbursement procedures upon production of sufficient documentation.
4.3. The Executive shall be eligible to participate in the Company’s stock option and other
incentive compensation plans in the sole discretion of the Company’s Board of Directors and in
accordance with applicable plans or policies.
5. Representations Regarding Former Employment.
5.1. The Executive represents that his performance of all the terms of this Agreement and the
performance of his duties for the Company does not and will not breach any agreement or obligation
of any kind made prior to his employment by the Company, including agreements or obligations he may
have with prior employers or entities for which he has provided services. The Executive has not
entered into, and agrees he will not enter into, any agreement or obligation either written or oral
in conflict herewith.
5.2. If, despite the fact that the Executive has made representations in Section 5.1 that he
does not have any other agreements that would conflict with his employment herein, the Executive
should find that confidential information belonging to any former employer or any other entity
might be usable in connection with the Company’s business, the Executive will not disclose to the
Company or use on behalf of the Company any confidential information belonging to any of the
Executive’s former employers (except in accordance with agreements between the Company and any such
former employer); but during the Executive’s employment by the Company he will use in the
performance of his duties all information which is generally known and used by persons with
training and experience comparable to his own and all information which is common knowledge in the
industry or otherwise legally in the public domain.
6. Termination of Employment and Severance. The Executive’s employment with the
Company will terminate on the last day of the Initial Term or any Extended Term, as the case may
be, upon Non-Renewal by either party. The parties further acknowledge that the Executive’s
employment with the Company may be terminated at any time prior in accordance with this Section 6
and that upon such termination the Executive shall be entitled to (1) accrued but unpaid salary and
accrued but unused vacation in accordance with the policy of the Company and (2) any vested stock
options or other vested equity-based compensation previously granted but only in accordance with
and subject to the terms of any agreements relating thereto executed
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by the Executive and the Company. Otherwise, the Executive shall be entitled to no compensation or
benefits except as set forth in this Section 6.
6.1. Termination Without Cause or for Good Reason. The Company shall have the right
to terminate the Executive’s employment with the Company at any time on thirty (30) days’ written
notice without Cause (as “Cause” is defined in Section 6.2), and the Executive may terminate his
employment at any time for Good Reason (as “Good Reason” is defined in Section 6.3). In the event
the Executive’s employment is terminated without Cause or for Good Reason, the Company shall pay
the Executive in a lump-sum a severance payment equal to twelve (12) months of his then-existing
Base Salary and, in the event the Executive is eligible under a bonus plan for a bonus for the year
of work in which his employment is terminated, an additional payment equivalent to the prorated
portion (the number of business days that the Executive was employed during the year divided by
235) of the Executive’s target bonus for that year (for purposes of this Agreement “target bonus”
shall mean either (i) any specific target bonus that may have been established for the Executive or
(ii) if no specific target bonus has been established, a percentage of the Executive’s base salary
equal to the maximum Potential Bonus Percentage established by the Compensation Committee of the
Board for that year’s management bonus pool) (collectively, “Severance Pay”). The Company shall
also reimburse the Executive for premiums he pays for health and dental insurance under COBRA, for
the same level of coverage that the Executive maintained at the time of his termination, for a
period of up to twelve (12) months, provided the Executive elects COBRA coverage (the “COBRA
Benefit”). The Company’s reimbursement obligation is conditioned on the Executive’s providing
written verification of his premium payments to the Company, and the reimbursement obligation will
end immediately if the Executive is eligible to obtain health care insurance from any other
employer during the payment period.
6.2. Termination For Cause. The Company shall have the right to terminate the
Executive’s employment with the Company at any time without notice for Cause. “Cause” for
termination shall be deemed to exist if any of the following circumstances exist in the reasonable
judgment of the Company: (i) the Executive has committed or engaged in intentional misconduct or
gross negligence in the exercise of his duties under this Agreement; (ii) the Executive has
committed theft, forgery, fraud, misappropriation, embezzlement, or any other act of material
misconduct against the Company or any of its affiliates; (iii) the Executive has violated any
fiduciary duty owed to the Company; (iv) the Executive is convicted of, or enters a guilty plea or
plea of no contest to a felony or any other crime involving moral turpitude; (v) the Executive is
unable to competently perform his duties under this Agreement because of his substantial dependence
on alcohol or any controlled substance; (vi) the Executive has engaged in any act (including, but
not limited to, unlawful discriminatory conduct) that results in substantial injury to the
reputation, business or business relationships of the Company or that, in each case, has subjected,
or if generally known would subject, the Company to public ridicule or embarrassment; (vii) the
Executive has violated a material provision of this Agreement and has failed to cure such breach
within ten (10) days of receiving written notice thereof, except that any breach by the Executive
of Sections 6.2(i)-(vi) or (viii) shall constitute Cause for termination even in the absence of
such written notice; or (viii) the Executive has failed to adequately
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perform the material duties of his position after having received thirty (30) days written notice
specifying the reasons why his performance is inadequate and has not cured, to the satisfaction of
the Board of Directors, the inadequate performance within such 30 days. In the event the
Executive’s employment is terminated at any time for Cause, the Executive will not receive any
Severance Pay, the COBRA Benefit, or any other such compensation or benefits, except for accrued
but unpaid salary and accrued but unused vacation in accordance with the policy of the Company.
6.3. Definition of Good Reason. “Good Reason” shall be deemed to exist if (i) without
the Executive’s consent the Company effects a material reduction in the nature or scope of the
Executive’s duties below those customarily performed by the Executive; (ii) the Company violates a
material provision of this Agreement; (iii) without the Executive’s consent the Company reduces the
Executive’s Base Salary; (iv) the Company becomes a division or subsidiary of another entity and
the Executive’s duties are on behalf of the divisional or subsidiary entity rather than the parent;
or (v) the Company relocates its principal office to a location more than fifty (50) miles from its
current location at 0000 Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx (twenty-five (25) miles if Good Reason is
being determined for purposes of Section 6.6 below). Good Reason shall not exist unless and until
the Executive provides the Company written notice of the acts alleged to constitute Good Reason and
the Company has failed to cure those acts within thirty (30) days of receipt of such notice.
6.4. Termination Without Good Reason. The Executive may voluntarily terminate his
employment with the Company at any time without Good Reason by providing sixty (60) days’ written
notice of his intent to do so. In the event the Executive voluntarily terminates his employment
without Good Reason, he will not receive any Severance Pay, the COBRA Benefit, or any other such
compensation or benefits, except for accrued but unpaid salary and accrued but unused vacation in
accordance with the policy of the Company.
6.5. Termination upon Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. If the Executive becomes
Disabled during the Employment Period, the Company may give him written notice in accordance with
this Agreement of its intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement, “Disabled” shall mean the absence of the
Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive
business days as a result of accident or incapacity due to mental or physical illness. Until the
Disability Effective Date, the Executive shall be entitled to salary, bonus and other benefits to
the extent provided for hereunder.
6.6. Termination following a Change in Control. In the event that the Executive is
terminated without Cause or the Executive terminates his employment for Good Reason within twelve
(12) months following a Change in Control as defined in Section 6.7, the
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Company shall, in lieu of the Severance Pay and the COBRA Benefit set forth in Section 6.1, pay the
Executive in a lump-sum a severance payment equal to (i) twenty-four (24) months of his
then-existing Base Salary and (ii), in the event the Executive is eligible for a bonus under a
bonus plan for the year of work in which his employment is terminated, an additional payment
equivalent to 100% of the Executive’s “target bonus” for that year (as defined in Section 6.1
above), without proration, provided that if the Executive did not participate in an executive
annual bonus plan in the year prior to termination because the Executive was recently hired, the
additional payment under clause (ii) above shall be a percentage of the Executive’s then-existing
Base Salary equal to the percentage of the executive bonus pool actually paid in the prior year to
then-serving executives. The Company shall also reimburse the Executive for premiums he pays for
health and dental insurance under COBRA, for the same level of coverage that the Executive
maintained at the time of his termination, for a period of up to eighteen (18) months, provided the
Executive elects COBRA coverage. The Company’s reimbursement obligation is conditioned on the
Executive’s providing written verification of his premium payments to the Company, and the
reimbursement obligation will end immediately if the Executive is eligible to obtain health care
insurance from any other employer during the payment period.
6.7. Definition of Change in Control. For the purpose of this Agreement, a “Change of
Control” shall mean:
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)
(3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 6.7; or
(b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
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(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the combined voting power of
the then outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
6.8. Payment in Lieu of Notice. Any time that notice of termination is required by
any party under this Agreement, the Company may, in its sole discretion and at its option, relieve
the Executive of his duties immediately and pay the Executive his regular base salary during the
notice period.
6.9. Outplacement Services. In the event that the Executive’s employment is
terminated for any reason other than those set forth in Sections 6.2, 6.4, or 6.5, the Company will
reimburse the Executive for payments made by the Executive for executive outplacement services for
up to twelve (12) months under a program approved by the Company in the exercise of its reasonable
discretion.
6.10. Non-Renewal. In the event of a Non-Renewal by the Company, the Executive will
not be entitled to any compensation or benefits under this Agreement except as follows:
(a) If the Non-Renewal by the Company results in the Executive’s employment ending within
twelve (12) months following a Change in Control, the Company
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shall provide the Executive the payments and benefits set forth in Section 6.6 (subject to the
terms and conditions therein).
(b) If the Non-Renewal by the Company results in the Executive’s employment ending at any
other time, the Company shall provide the Executive (i) in a lump-sum a severance payment equal to
twelve (12) months of his then-existing Base Salary; (ii) in the event the Executive is eligible
for a bonus under a bonus plan for the year of work in which his employment is terminated, an
additional payment equivalent to the prorated portion (the number of business days that the
Executive was employed during the year divided by 235) of the Executive’s “target bonus” for that
year; and (iii) the COBRA Benefit (as that term is defined in Section 6.1 and subject to the same
terms and conditions as set forth in Section 6.1).
6.11 Requirement of a General Release. The Company shall not be obligated to provide
the Severance Pay, the COBRA Benefit, or any of the other payments and benefits set forth in
Sections 6.1, 6.6, 6.9, or 6.10 above unless and until the Executive executes a general release of
all claims against the Company substantially in the form of one of the two releases (whichever is
appropriate) attached hereto as Exhibit A and the release becomes effective.
6.12. Section 409A. Notwithstanding anything to the contrary contained herein, in the
event that the Company determines that one or more payments under this Section 6, if payable, are
subject to Section 409A of the Code: (i) such payment(s) under this Section 6 shall not commence
until six (6) months after the Executive’s last day of employment (or, if earlier, the date
Executive dies) to the extent necessary to avoid the imposition of the excise tax under Section
409A of the Code, and (ii) the Company may unilaterally amend this Agreement to the minimum extent
necessary to avoid the imposition of the excise tax under Section 409A of the Code.
7. Certain Additional Payment Contingencies.
7.1. Notwithstanding anything in this Agreement to the contrary and except as set forth below,
in the event it shall be determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without regard to any additional payments
required under this Section) (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 7.1, if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Executive, after taking into
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account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at
least $50,000 (taking into account both income taxes and any Excise Tax) as compared to the net
after-tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a
reduction of the Payments, in the aggregate, to an amount (the “Reduced Amount”) such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made
to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
7.2. Subject to the provisions of Section 7.3, all determinations required to be made under
this Section 7, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Ernst & Young LLP or such other certified public accounting firm as may be designated by
the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to
the Company and the Executive within fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7,
shall be paid by the Company to the Executive within five days of the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 7.3, and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive.
7.3. The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive shall:
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(a) give the Company any information reasonably requested by the Company relating to such
claim,
(b) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order effectively to contest such claim, and
(d) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 7.3, the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
7.4. If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 7.3, the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 7.3) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 7.3, a determination
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is made that the Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
8. Indemnification. The Company will, to the fullest extent permitted by Delaware
General Corporation Law, as amended, indemnify the Executive for all liabilities and expenses that
may be incurred in connection with the Executive’s service on behalf of the Company.
9. Proprietary Information.
9.1. Proprietary Information Defined. The term “Proprietary Information” shall mean
any and all confidential and/or proprietary knowledge, data or information of the Company. By way
of illustration but not limitation, “Proprietary Information” includes (i) trade secrets,
inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other
works of authorship, know-how, improvements, discoveries, developments, designs and techniques
(hereinafter collectively referred to as “Inventions”); (ii) information regarding plans for
research, development, new products or services, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and customers; and (iii)
information regarding the skills and compensation of other employees of the Company.
9.2. Non-Disclosure. At all times during the Executive’s employment and thereafter,
the Executive agrees to hold in strictest confidence and will not disclose, use, lecture upon or
publish any of the Company’s Proprietary Information, except as such disclosure, use or publication
may be required in connection with the Executive’s work for the Company, or unless the Company
expressly authorizes such in writing. The Executive will obtain the Company’s written approval
before publishing or submitting for publication any material (written, verbal, or otherwise) that
relates to the Executive’s work at the Company and/or incorporates any Proprietary Information.
The Executive hereby assigns to the Company any rights the Executive may have or acquire in such
Proprietary Information and recognizes that all Proprietary Information shall be the sole property
of the Company and its assigns. The Executive has been informed and acknowledges that the
unauthorized taking of the Company’s trade secrets will constitute Cause for termination and may
subject the Executive to civil and/or criminal penalties.
9.3. Own Knowledge. Subject to the foregoing non-disclosure obligations, it is
understood that, at all such times, the Executive is free personally to use information which is
generally known in the trade or industry, which is not gained as result of a breach of this
Agreement, and which is gained through the Executive’s own, skill, knowledge, and experience.
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10. Assignment of Inventions.
10.1. Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret,
patent, copyright, mask work and other intellectual property rights or “moral rights” throughout
the world. “Moral rights” refers to any rights to claim authorship of an Invention or to object to
or prevent the modification of any Invention, or to withdraw from circulation or control the
publication or distribution of any Invention, and any similar right, existing under judicial or
statutory law of any country in the world, or under any treaty, regardless of whether or not such
right is denominated or generally referred to as a “moral right.”
10.2. Prior Inventions. Inventions, if any, patented or unpatented, which the
Executive made prior to the commencement of the Executive’s employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty, the Executive
agrees to set forth on Exhibit B (Previous Inventions) attached hereto a complete list of
all Inventions that the Executive has, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice prior to the
commencement of the Executive’s employment with the Company, that the Executive considers to be his
property or the property of third parties and that the Executive wishes to have excluded from the
scope of this Agreement (collectively referred to as “Prior Inventions”). If disclosure of any
such Prior Invention would cause the Executive to violate any prior confidentiality agreement, the
Executive understands that he is not to list such Prior Inventions in Exhibit B but is only
to disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs
and the fact that full disclosure as to such inventions has not been made for that reason. A space
is provided on Exhibit B for such purpose. If no such disclosure is attached, the
Executive represents that there are no Prior Inventions. If, in the course of the Executive’s
employment with the Company, the Executive incorporates a Prior Invention into a Company product,
process or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of
sublicensees) to make, have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, the Executive agrees that he will not incorporate, or permit to be incorporated, Prior
Inventions in any Company Inventions without the Company’s prior written consent.
10.3. Assignment of Inventions. The Executive hereby assigns and agrees to assign in
the future (when any such Inventions or Proprietary Rights are first reduced to practice or first
fixed in a tangible medium, as applicable) to the Company all his right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not
patentable or registrable under copyright or similar statutes, made or conceived or reduced to
practice or learned by the Executive, either alone or jointly with others, during the period of his
employment with the Company. Inventions assigned to the Company, or to a third party as directed
by the Company pursuant to this Section 10, are hereinafter referred to as “Company Inventions.”
10.4. Unassigned Inventions. The Company acknowledges that this Agreement will not be
deemed to require assignment of any invention that was developed entirely on the Executive’s own
time without using the Company’s equipment, supplies, facilities, or trade
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secrets and neither related to the Company’s actual or anticipated business, research or
development, nor resulted from work performed by the Executive for the Company.
10.5. Government or Third Party. The Executive also agrees to assign all his right,
title and interest in and to any particular Company Invention to a third party, including without
limitation the United States, as directed by the Company.
10.6. Works for Hire. The Executive acknowledges that all original works of
authorship which are made by him (solely or jointly with others) within the scope of Executive’s
employment and which are protectable by copyright are “works made for hire,” pursuant to United
States Copyright Act (17 U.S.C., Section 101).
10.7. Enforcement of Proprietary Rights. The Executive agrees to assist the Company
in every proper way to obtain, and from time to time enforce, United States and foreign Proprietary
Rights relating to Company Inventions in any and all countries. To that end the Executive agrees
to execute, verify and deliver such documents and perform such other acts (including appearances as
a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting,
evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, the Executive will execute, verify and deliver assignments of such Proprietary Rights to
the Company or its designee. The Executive’s obligation to assist the Company with respect to
Proprietary Rights relating to such Company Inventions in any and all countries shall continue
beyond the termination of his employment, but the Company shall compensate the Executive at a
reasonable rate after the Executive’s termination for the time actually spent by the Executive at
the Company’s request on such assistance.
10.8. Appointment of Attorney in Fact. In the event the Company is unable for any
reason, after reasonable effort, to secure the Executive’s signature on any document needed in
connection with the actions specified in this Section 10, the Executive hereby irrevocably
designates and appoints the Company and any of its duly authorized officers and agents as his agent
and attorney in fact, which appointment is coupled with an interest, to act for and in the
Executive’s behalf to execute, verify and file any such documents and to do all other lawfully
permitted acts to further the purposes of the preceding paragraph with the same legal force and
effect as if executed by the Executive. The Executive hereby waives and quitclaims to the Company
any and all claims, of any nature whatsoever, which the Executive now or may hereafter have for
infringement of any Proprietary Rights assigned hereunder to the Company.
11. Restrictive Covenants. In consideration of the Executive’s employment or
continued employment by the Company, and the compensation now and hereafter paid to Executive, the
Executive hereby agrees to the following:
11.1. Non-Solicitation of Employees. The Executive agrees that for the period of the
Executive’s employment by the Company and for twelve (12) months after the date the Executive’s
employment by the Company ends for any reason, the Executive will not, either directly or through
others, except during the performance of his duties on behalf of the
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Company: (i) solicit for hire, or hire, any employee of the Company or otherwise encourage any
employee of the Company to end his relationship with the Company; (ii) solicit or otherwise
encourage any employee of the Company to accept employment with any other person or business
entity; or (iii) assist any other person or entity in carrying out any act restricted by this
Section 11.1. For purposes of this Section 11.1, an employee of the Company shall be any person
who, at the time of the solicitation or encouragement prohibited by this Section, is employed by
the Company or was employed by the Company at any time within the prior six (6) months.
11.2. Business Restrictions with Customers, Contractors and Consultants. The
Executive agrees that for the period of the Executive’s employment by the Company and for twelve
(12) months after the date the Executive’s employment by the Company ends for any reason, the
Executive will not, either directly or through others, except during the performance of his duties
on behalf of the Company: (i) solicit or otherwise encourage any consultant, contractor, customer
or prospective customer of the Company, with whom the Executive had business-related contact as a
result of his employment or whose identity the Executive learned as a result of his employment, to
diminish or materially alter its relationship with the Company; (ii) accept or conduct competitive
business with any customer or prospective customer of the Company with whom the Executive had
business-related contact as a result of his employment or whose identity the Executive learned as a
result of his employment; or (iii) assist any other person or entity in carrying out any act
restricted by this Section 11.2.
11.3. Non-Competition. The Executive agrees that for the period of the Executive’s
employment with the Company, and for the period of twelve (12) months after the later of the date
the Executive’s employment with the Company ends for any reason, or the date a court of competent
jurisdiction enters an order enforcing this provision and finding that the Executive has breached
this Section 11.3, the Executive will not directly or through others: (i) in any capacity similar
to the capacity in which he was employed by the Company or otherwise competitive with the Company,
become employed by or provide services to any other person or entity that offers products or
services competitive with the Company’s products or services within the United States or any other
country where the Company provides or offers such products or services, or (ii) on his own behalf
or on behalf of any other person or entity, compete with the Company in the sale, service,
distribution or licensing of any products or services competitive with the Company’s products or
services within the United States or any other country where the Company provides or offers such
products or services.
11.4. Acknowledgments. The Executive acknowledges that the Company’s business is
national and international in scope, and, therefore, that the restrictions contained in this
Section 11 are reasonable in scope and necessary to protect the best interests of the Company. The
Executive further acknowledges that in the course of his employment with the Company, he also has
duties involving the Company’s subsidiaries and affiliates, has learned or been exposed to trade
secrets and proprietary information relating to such subsidiaries and affiliates and that the
obligations of this Section 11 extend to such subsidiaries and affiliates. The parties intend that
the covenants contained herein shall be deemed to be a series of separate
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covenants, one for each and every county of each state of the United States of America and the
District of Columbia. If any of the provisions of such covenants shall be held unenforceable
because of being excessively broad as to scope or subject, such provisions shall be modified and
construed by a court of competent jurisdiction by limiting and reducing it so as to be enforceable
to the extent compatible with the applicable law as it shall then appear.
11.5. Injunctive Relief. In the event of a breach or a threatened or attempted breach
of any provision of this Section 11 by the Executive, the Company shall, in addition to other
remedies available to it, be entitled to temporary and permanent injunctions to enforce the
provisions of this Section 11 without the necessity of showing any actual damages or injury and
without posting bond or other security, which the Executive expressly waives. The Company shall
further be entitled to an order by a court of competent jurisdiction for expedited discovery and
the Executive covenants not to raise any objection to such a request by the Company.
11.6. Notification of New Company. In the event that the Executive leaves the employ
of the Company, the Executive authorizes the Company to provide notice of the Executive’s rights
and obligations under this Agreement to the Executive’s subsequent employer and to any other entity
or person to whom the Executive provides services.
12. Litigation Cooperation. The Executive will cooperate with the Company, during the
Term and thereafter (including following the Executive’s termination of employment for any reason),
by making himself reasonably available to testify on behalf of the Company in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and to reasonably assist the
Company in any such action, suit, or proceeding by providing information and meeting and consulting
with the Board or its representatives or counsel, or representatives or counsel to the Company as
reasonably requested. The Company will reimburse the Executive, for all expenses reasonably
incurred by him in connection with his provision of testimony or assistance (except with respect to
any litigation between the Executive and the Company or any litigation in which the parties are
otherwise adverse).
13. Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Xxxxx Xxxxx
If to the Company:
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or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
14. General Provisions.
14.1. Successors and Assigns. If the Company shall at any time be merged or
consolidated into or with another corporation, or if substantially all the assets of the Company
are transferred to another corporation, the provisions of this Agreement shall be binding upon and
inure to the benefit of the corporation resulting from such merger, consolidation or transfer.
14.2. Entire Agreement; Modification. This Agreement sets forth the entire
understanding with respect to the subject of employment of the Executive and shall not be amended,
modified, or rescinded except by a written instrument signed by both parties hereto and approved by
the Board. This Agreement specifically supersedes and cancels the Proprietary Information,
Inventions, and Non-Solicitation Agreement dated September 2, 1991 entered into by the Company and
the Executive.
14.3. Choice of Law and Jurisdiction; Attorney’s Fees. This Agreement shall be
governed by and construed under the laws of the State of Maryland, without regard to its conflict
of laws doctrine. The Executive expressly consents to the jurisdiction of the state and federal
courts serving the State of Maryland for all actions arising out of or relating to this Agreement
and expressly waives any defense that such courts lack personal jurisdiction over him. All such
claims shall be tried in the federal or state courts serving the State of Maryland to the exclusion
of all others and such courts shall have exclusive jurisdiction over such disputes. In the event
of any proceeding arising out of or relating to this Agreement in which the Executive is the
prevailing party against the Company, the Company shall pay reasonable attorneys’ fees incurred by
the Executive in such proceeding.
14.4. Severability. If any provision of this Agreement or the application thereof is
held invalid, the invalidity shall not affect other provisions or applications of this Agreement
that can be given effect without the invalid provisions or applications and to this end the
provisions of this Agreement are declared to be severable.
14.5. Waiver of Breach. No waiver of any breach of any term or provision of this
Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the breach.
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14.6. Assignment of Agreement. The Executive acknowledges that his services are
unique and personal. Accordingly, the Executive may not assign his rights or delegate his duties
or obligations under this Agreement to any person or entity.
14.7. Representation. The Executive represents that he is knowledgeable and
sophisticated as to business matters, including the subject matter of this Agreement, that he has
read this Agreement and that he understands its terms. The Executive acknowledges that, prior to
assenting to the terms of this Agreement, he has been given a reasonable time to review it, to
consult with counsel of his choice, and to negotiate at arm’s-length with the Company as to its
contents. The Executive and the Company agree that the language used in this Agreement is the
language chosen by the parties to express their mutual intent, and that they have entered into this
Agreement freely and voluntarily and without pressure or coercion from anyone.
14.8. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the Executive, intending to be legally bound, have
executed this Agreement on the day and year first above written.
| MARTEK BIOSCIENCES CORPORATION | ||||||
| By: |
|
|||||
| Name: | ||||||
| Title: | ||||||
| Xxxxx Xxxxx | ||||||
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